Economic For Managers

TASK A

Today since more and more companies are engaging themselves into the international business environment for the purpose of increasing their clientele base and thus profitability and also for surviving for a longer term in the market, their operations, in financial terms and ranges. They constantly send money all around the world for a wide variety of reasons. One of them is that the firms have slowly expanded into international regions and are now operating at global scale, having spread their operations not only in just one country, but rather they are nowadays known more of multinational in nature – the ones which operate in more than one country (Hoon and Lim, 2001). It is because of this very reason they have to deal financially, i.e. send to and receive money from foreign nations, the places where they may have their operations set up. Therefore, it may not be wrong to say that the demand for such kinds of services from banks is very high, as they are operating in a very broad market region nowadays and need to constantly send money to different countries for the purpose of ensuring that business operations are being carried out smoothly and also that organizational goals and objectives are attained with far more ease and comfort. Since demand for such services is so high, supply for them is also every high, clearly indicating that banking institutions have realized that it is one of the most effective ways through which they can cater to the needs and wants of corporate clients, thus extending their own existence and operations in market for a longer duration of time (Goldsby and et. al, 2006).

Various financial institutions, now provide such services to business organizations that help and facilitate them to send their money abroad, so as to ensure that their operations are carried out in a smooth fashion, without any hindrances and also the organization is able to sustain and survive different kinds of situations in the market & still be able to fulfill its international aims and objectives. But to provide such kinds of services to companies, banking firms charge different kinds of fees from them, depending on the kind of transaction taking place and the amount of money that is to be transferred abroad (Transition Economies, 2013). Further, in the same context, it can also be said that the trend of rising foreign payments by business organizations is increasing at a very rapid pace, due to which banking firms also have developed and improved their functioning as well as tie ups with foreign financial institutions so that such transactions can be carried out smoothly and also very comfortably. The market equilibrium, in the same context has changed very dramatically in the same context, as such organizations have started to improve their functioning in a manner that they can facilitate these kinds of transactions and thus be helpful to companies for carrying out different kinds of functions and operations in the international market (Pryor, 2005).

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TASK B

Welfare and Elasticity’s

Transactions in financial terms has become one of the most important and crucial aspects of business operations for companies, regardless of the industry they may be operating in. This aspect holds great importance for those companies that operate in the international business environment. In this regard, it may not be wrong to say that for such companies, one of the most important aspects of their daily business operations is related to transacting and transferring their money to foreign countries, with the help of which numerous kinds of functions and operations can be carried out by the companies and they can also be made to survive in the highly competitive market for a longer duration of time (Rosefielde, 2008). But many studies and investigations have highlighted that fees that is charged for such kinds of functions and operations, to a great extent is dependent upon a variety of factors. This means that its elasticity depends upon large numbers of factors and forces.

One such major point of influence is the exchange rate that may be prevailing in the market. Since business organizations are more of global in nature, branches and operations are carried out in many countries and regions, indicating that they have to transact in various kinds of currencies. In this regard, it can also be said that if there are any kind of changes in the same context, there are substantial chances that international financial transactions, i.e. transferring money to foreign countries may become a tedious and in some cases expensive task as well (Cave and Shortall, 2011). Therefore, elasticity in international transactions is dependent upon a large variety of factors and forces, meaning that sometimes it may prove to be a costly affair for the companies, as they may be charged higher fees from banks for it; while sometimes they may not be charged with too high fees. In the similar manner, it can also be said that international financial transactions have a very crucial role to play in the process of business operations at the international level. Thus, it may not be wrong to say that, the fees that is charged from corporate clients for sending money abroad depends to a great deal on a wide variety of factors and forces, due to which it can be said that banks charge different prices from different companies (Tohidinia, 2011).

Firm Costs and profit maximization

One of the main objectives that business organizations have to look to achieve is that of to increase their profitability by reducing their costs and thus also try and survive for a longer term in the market. Management of such companies also tries to pay attention and make sure that even while operating in the international market and transacting in financial terms, the firm is able to maintain its profitability, while keeping the costs as low as possible (Dace, Pakere and Blumberga, 2013). It is only through such approach that the organization can be made to survive for a longer term in the market and sustain the competition, thus making the process of attaining its goals and objectives highly successful and effective.

One of the main objectives that business organizations have to look to achieve is that of to increase their profitability by reducing their costs and thus also try and survive for a longer term in the market. Management of such companies also tries to pay attention and make sure that even while operating in the international market and transacting in financial terms, the firm is able to maintain its profitability, while keeping the costs as low as possible (Dace, Pakere and Blumberga, 2013). It is only through such approach that the organization can be made to survive for a longer term in the market and sustain the competition, thus making the process of attaining its goals and objectives highly successful and effective.

Market Structure

This aspect of business operations for companies, by many has been defined to be perfectly competitive in nature, as there are a lot many business organizations and firms operating in the market, i.e. the banks that provide such kinds of services to their corporate clients or the business organizations (Carmel and et.al, 2007). Due to the presence of a large number of firms and companies in this industry, it may not be wrong to say that business firms have a large variety of options available to them, through which they can send money to foreign countries to their various branches and operations. Even though, there is a very wide gap and differences between prices, i.e. the fees that banking firms charge from their corporate clients. This is mainly because of fluctuations and changes in the exchange rates along with that of developments and evolutions in currency markets, due to which their values keep on changing at a frequent basis. It is because of this very reasons, companies have to pay very different prices to banking firms for purpose of engaging into activities of sending money abroad. In this sense, the banking industry can also be termed as monopolistic, as there is no other industry in the world that faces such a kind of situations (Rosefielde, 2008).

Many research studies have shown that because of such an unpredictable and unusual nature of the industry, it is termed to be a monopolistic sector of economy. There is no other industry in the world that faces or goes through such kind of changes and developments at such a rapid pace and has to undergo so many different evolutions all at one time. There is another reason as well which describes as to why this industry is monopolistic in nature. It is due to the fact that very less time in consumed in carrying out such transactions and money can be delivered to business firms or individuals, whatever the requirement may be (Orr, 2011).

Market failures and the role of government

On many occasions it has been observed that the market of transferring such kind of money has changed by a great margin, along with regular failures. There have been many instances wherein it has been experienced that the process of sending money abroad has not proved to be a successful one and also that it has failed by a considerable margin. There are many instances where the industry has failed by a great margin due to a wide variety of reasons, which includes the likes of failure in the international financial market. There are some hidden changes as well that banks levy upon their customers, i.e. the business houses to transfer their money to foreign countries, that in turn has led to failure of this industry at a significant level (Sherwood, 2014).

Similarly, government also has a very crucial role to play in this regard. They are tasked with the responsibility to make sure that such transactions are truthful in nature and also they are not fraudulent in nature. If certain measures and steps are not taken to measure working of the industry, then there are very less chances for the industry to operate in a successful manner and also to ensure the process of international transactions are carried out in the most efficient & effective of manner (Hoon and Lim, 2001). In addition to it, studies have also shown that due to regular changes and fluctuations in the international currency markets, a lot of changes and developments keep on happening in the market, because of which, companies have to suffer by a great margin when they transact and send money abroad due to a wide variety of reasons, like expansion or carrying out the operations in a regular and smooth manner.

CONCLUSION

During the report it was seen that various financial institutions, now provide such services to business organizations that help and facilitate them to send their money abroad, so as to ensure that their operations are carried out in a smooth fashion, without any hindrances and also the organization is able to sustain and survive different kinds of situations in the market & still be able to fulfill its international aims and objectives. The market equilibrium, in the same context has changed very dramatically in the same context, as such organizations have started to improve their functioning in a manner that they can facilitate these kinds of transactions and thus be helpful to companies for carrying out different kinds of functions and operations in the international market.

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REFERENCES

• Orr, T., 2011. Understanding Economic Systems. The Rosen Publishing Group.
• Pryor, L. F., 2005. Economic Systems of Foraging, Agricultural, and Industrial Societies. Cambridge University Press.
• Rosefielde, S., 2008. Comparative Economic Systems: Culture, Wealth, and Power in the 21st Century. John Wiley & Sons.
• Tohidinia, A., 2011. The feasibility of effectual ethics on the foundations of micro and macro issues of economics.
• Journals
• Carmel, E. and et.al., 2007. Governing the activation of older workers in the European Union: The construction of the “activated retiree”. International Journal of Sociology and Social Policy. 27(9/10).
• Cave, M. and Shortall, T., 2011. The extended gestation and birth of the European Commission's Recommendation on the regulation of fibre networks. Info. 13(5).
• Choudhury, A. M. and Hoque, Z. M., 2004. Ethics and economic theory. International Journal of Social Economics. 31(8).

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